St George Insider

So many of us have been brought up to believe and to practice the so called “art” of always negotiating for a better price, no matter what price is offered. I would like to relate a recent true story of real estate negotiation.

On a weekend, a property had presented itself in one of the many golf course communities in St. George. A client of mine wanted to see it. I printed a listing sheet and brought it with us to view the property. It was vacant; listed as approximately 4000 square feet, 7 bedrooms, 4 baths, views of Pine Valley Mountain, 2 car garage, and less than 10 years old. It was priced at $344,000. We saw the home and other agents were showing it at the same time.
My client decided to make an offer right away. I called the listing agent and he said there were other offers on the property already. They all would be presented on Monday. We decided to offer $20,000 more than the listing thinking that would be the winning bid. The temptation for many is to offer less than asking price, but we knew with this “bargain property” bids would go higher.

When the bids were all in and presented that Monday morning ours did not prevail. There were seven bids.  Ours was fourth from the highest. The client and I were disappointed we didn’t get the home. We found out the high bidder was very motivated and offered not only the highest price,(cash) but the highest earnest money deposit, (non-refundable) and the shortest time to close. This buyer deserved to get the home. They played to win and did win.

Some back ground and analysis:

The home was actually larger than posted on the listing. As we viewed the home, it felt larger than the 4000 square feet stated on the listing. As it turns out, it was 5000 square feet and our calculations per square feet was off by 20%.  It was a better buy than on the surface and the top bid was still low because of the cost per square foot.

The drawbacks to the home which we took into consideration; only a two car garage, and the, only adequate back yard size, weighed into our decision. But the biggest drawback in my opinion, was that the home was built on piers and had a wooden basement floor over a crawl space. This piece of information, which was not immediately apparent, slanted our bid to a number which included resale calculations and future marketability.

Admittedly, we were conservative, but  the prevailing bidder will make a killing when they decide to sell a 5,000 square foot home in a great neighborhood, with a fantastic view, for competitive price based upon its size. There will always be buyers who will want location and size at a good price. This home still had room for more profit, perhaps another $100,000.

Moral of the story: Ask yourself: What is the house really worth in today’s market? How much profit is left after your offer? You don’t profit from homes you don’t own. At what point is it that your bid truly is too much? Do your homework and then play to win.